Net business profit before tax
Annual salary you'd pay yourself as director
Pte Ltd is more tax-efficient
You could save $3,275.00 per year by operating as a Pte Ltd with a director salary of $60,000.00.
Sole Prop Tax
$12,450.00
8.3% effective
Pte Ltd Tax
$9,175.00
6.1% effective
Key differences between business structures
Tax treatment
Sole proprietorship income is taxed at personal income tax rates (0-24%). A Pte Ltd is taxed at 17% corporate rate with partial exemption, and dividends from after-tax profits are tax-free under the one-tier system. At higher income levels, the Pte Ltd structure typically offers significant tax savings.
Limited liability
A Pte Ltd company provides limited liability protection -- your personal assets are separate from business liabilities. A sole proprietorship has unlimited liability, meaning personal assets can be seized to settle business debts.
Setup and compliance costs
A sole proprietorship costs about $115 to register with ACRA (renewable annually). A Pte Ltd costs $315 to incorporate and requires annual filing, appointment of a company secretary, and audited accounts if revenue exceeds $10M. Consider these ongoing costs when deciding.
Note: This calculator provides tax comparison estimates only. It does not account for CPF contributions, tax reliefs, or specific business deductions. Consult a qualified accountant for personalised advice.
How the two business structures compare on tax, liability, and compliance costs
What is the main tax difference between a sole proprietorship and a company?
A sole proprietorship is taxed at personal income tax rates (0% to 24%) on all profits. A private limited company (Pte Ltd) is taxed at a flat 17% corporate rate, with partial exemptions for new companies. If your business earns S$200,000 profit, a sole proprietor pays about S$18,500 in tax, while a new Pte Ltd pays about S$16,400. The gap widens at higher profits.
How does liability differ between the two structures?
A sole proprietor has unlimited personal liability — if your business owes money or gets sued, your personal assets (savings, property, car) are at risk. A Pte Ltd company is a separate legal entity, so your liability is limited to the amount you invested as share capital. For businesses with higher risks or debts, a company offers much better protection.
Which is cheaper to set up and run?
A sole proprietorship costs S$100 to S$160 to register with ACRA and has minimal ongoing compliance. A Pte Ltd costs S$300+ to incorporate and requires annual returns (S$60), a company secretary (S$300 to S$1,200 per year), and financial statements. You may also need an auditor if revenue exceeds S$10 million. Total annual compliance costs for a Pte Ltd are typically S$1,000 to S$3,000.
When does it make sense to switch from sole proprietorship to a company?
Consider incorporating when your annual profit exceeds S$80,000 to S$100,000 (the tax savings start to outweigh compliance costs), when you want to protect personal assets, when you plan to raise investment, or when you need to look more credible to larger clients. Many Singapore businesses start as sole proprietors and incorporate later as they grow.
How do CPF obligations differ?
Sole proprietors must pay MediSave on their net trade income (8% to 10.5%) and can voluntarily contribute to CPF. If you set up a Pte Ltd and pay yourself a salary, both you and the company contribute CPF — 20% from you and 17% from the company. The company CPF contribution is a deductible business expense. This gives you better CPF savings but increases total costs.
Can a company retain profits at a lower tax rate?
Yes. A Pte Ltd can keep profits in the company at the 17% corporate rate rather than distributing them. Singapore has no dividend tax — when you eventually pay yourself dividends, there is no additional tax. This is powerful for reinvestment. A sole proprietor pays personal tax on all profits each year, whether or not they take the money out of the business.
Which structure is better for getting government grants?
Both structures can access some grants, but Pte Ltd companies qualify for more schemes. The Enterprise Development Grant (EDG), Productivity Solutions Grant (PSG), and Start-up SG Equity are only available to registered companies. Sole proprietors can access SkillsFuture and some SME-focused programmes. If grants are important to your growth plan, a Pte Ltd gives you more options.
How does GST registration differ?
The GST registration threshold (S$1 million taxable turnover) applies equally to both structures. There is no difference in GST obligations between a sole proprietorship and a Pte Ltd. Both must register when they hit the threshold, charge 9% GST, and file quarterly returns. The choice of business structure does not affect your GST position.
IRAS-Aligned: Based on 2025 IRAS rates and thresholds. For personal advice, speak to a qualified tax professional.
Related Calculators
Company Tax Calculator
Calculate Singapore corporate tax at 17% with partial and startup exemptions from IRAS.
Dividend Tax Calculator
Singapore has a one-tier system — dividends are tax-free. See how it compares.
GST Registration Threshold
Check if your turnover exceeds the S$1M mandatory GST registration threshold.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms